This article analyses Braga finances in respect of the 2020/21 season.
Season review
SC Braga made it back-to-back seasons of lifting a trophy, winning the Taça de Portugal against Benfica. SC Braga nearly made it a domestic double as it finished runners-up to Sporting CP in the Taça da Liga, a competition it won the previous season.
In the league, SC Braga failed to reach the podium (top 3) in the 2021, as it had done in the 2020. The club were as high as 2nd place after two-thirds of the championship. However, injuries that narrowed the squad, saw SC Braga slip to 4th in the Primeira Liga.
In Europe, SC Braga lost against AS Roma in the round of 32.
SC Braga finances were hit by the lack of fan in its stadium, which, combined with a significant drop in other operating income related to Rúben Amorim departure to Sporting CP. This resulted in SC Braga recording its first loss in three years, albeit only €1.9m.
Braga Finances – Revenue
Braga’s revenue grew from €22.4m to €24.2m (8%). This was because of commercial and broadcast revenue growth, despite matchday revenue being non-existent. Other operating income notably fell from €19.9m to €1.7m (91%). SC Braga say this is due to compensation following Rúben Amorim move to Sporting CP. This hence led to a sizeable drop in total income from €42.3m to €25.9m (39%).
Matchday
Matchday revenue fell from €2.2m to €0.0m (-99%). Braga’s first team played only one match (against AEK Atenas, in the UEFA Europa League (UEL)) in which there was the presence of the public in the Municipal Stadium of Braga (but only 2,200 tickets were allowed to be sold). The return of fans to the stadium in 2021/22 should recover some of this lost revenue.
Broadcast
Broadcast revenue grew from €17.4m to €20.3m (17%). The growth can be explained by two reasons. First, as a result of the interruption of competitions in the last quarter of the 2019/2020 season, the season was extended until July 26, 2020. This resulted in the deferral of a portion of broadcast revenue to the financial year under review.
Second, The advantage obtained with the exclusive assignment of its broadcast rights which increased by 41% year on year (from €6.6m to €9.3m) on the corresponding revenues in the period ended on June 30, 2021.
SC Braga has already matched its 2020/21 UEL performance and further progression will boost broadcast revenue in 2022.
Commercial
Commercial revenue grew from €2.9m to €3.9m (36%). Regarding sponsorship and advertising, SC Braga maintained the main partnerships (with Betano, Central de Cervejas, AMCO, Casa Peixoto, Hummel and Sabseg), although with slight improvements in consideration earned, but also by the recognition in the year under analysis of deferred amounts from the 2019/2020 season, due to the extension of the 2019/2020 season.
Braga also increased sales of merchandising products compared to the same period of the previous year, mainly because of the club’s online store, despite the sanitary restrictions negatively affecting the operation of physical stores and other commercial opportunities, such as Braga Day.
With the main commercial partners relatively unchanged in 2021/22, 2022 commercial revenue growth is likely limited, however the easing of some sanitary restrictions should help.
Braga Finances – Revenue summary
The extension of the 2019/2020 season, resulted, economically, in the deferral of portions of revenues and expenses for the fiscal year under analysis. This contributed to the revenue growth achieved in 2021. With the lifting of the sanitary restrictions, the revenues related to matchday will recover, which will certainly have a positive impact on the revenues for the next fiscal year. This combined with a strong UEL campaign could see revenue rise further in 2022.
Braga Finances – Operating costs
Operating costs rose from €37.4m to €42.0m (12%) as the club’s wage bill rose by over a third.
Wages
Braga’s wage bill rose from €20.2m to €27.3m (35%). This increase has occurred in several segments, namely in terms of salaries, performance bonuses and contract terminations:
- Salaries increased with the purchase of new players (e.g. Al Musrati, Lucas Piazón, Nicolás Gaitán); the renewal of contractual ties with other players (e. g. David Carmo and Paulinho); and to ensure the maintenance of the technical staff (lead by Carlos Carvalhal).
- Signing on bonuses relate to the contracts of Al Musrati, Andraz Sporar, André Castro, Guilherme Schettine and Iuri Medeiros.
- Performance awards were obtained as a result of season’s performance, particularly in relation to its Portuguese Cup win.
- Contract termination increased due to the termination of contracts with Andrej Lukic, Diogo Figueiras, Diogo Viana and Rafael Assis.
The wages to revenue ratio stands at 113%. This is significantly higher than the recommended maximum ratio of 70% stated by UEFA. This is likely to fall next year give rising revenue, which is likely to exceed any wage growth.
Other costs
Other operating costs fell from €16.7m to €13.9m (17%). This was largely due to matchday cost savings.
Braga Finances – Operating costs summary
The increase in operating costs for SC Braga is due to the desire to increase its competitiveness and performance. The club will be hoping that this investment is met with financial rewards of increased revenue and squad value in the coming seasons.
Braga Finances – Transfers
It was a busy transfer window for SC Braga as it achieved nearly €50m in player sales. Joining the club were Ruiz (€8m) and Borja (€3m) for a combined €11m. Departing the club were Trincao (€31m), Paulinho (€16m), Hassan (€2m) and Alef (€0.2m) for a combined €49m. This resulted in a net transfer income of €38m.
Transfers: Paulinho (€16m), Samuel Costa (€5.25m), Ahmed Hassan (€2m), Yvan Noupa (€0.5m + €0.25m for objectives accomplished), Gil Dias (€0.75m), Alef Saldanha (€0.15m) — total of €24.9m.
Loans: Fábio Martins (€0,1m), Francisco Moura (€0.3m), Pablo Santos (€0.024m) — total of €1.3m.
Amortisation
Player amortisation rose from €5.5m to €8.0m (44%). The aforementioned increase reflects the investment made by Braga in strengthening its squads. Lower investment in the squad in the 2020/21 summer transfer window is likely to result in a reduction in player amortisation in 2022.
Profit on player sales
Profit on player sales fell from €24m to €21.3m (11%). Despite transfermrket.com recording the Trincao sale in the 2020/21 season, it was recorded in the 2020 financial year for Braga. A reduction in player sales so far in 2021/22 will likely result in a decline in profit on player sales in 2022.
Transfer debtors / creditors
Braga is owed €20.6m in transfer fees. The largest of Braga’s debtors were Sporting CP (€12.2m), UD Almeria (€5.2m) and FC Porto (€1.5m).
On the other hand, Braga owes around €31m, which it includes not just transfer fees owed, but also amounts to agents and third parties who own a portion of a player. This net €10.4m creditor position may explain the reduced transfer activity in 2021/22.
Braga Finances – Transfers summary
Player trading is a critical part of the business model of SC Braga. The club has achieved a profit of sales of over €20m in each of the last three seasons. This is a similar level of income as is generated via traditional revenue streams, highlighting its importance. Lower player sales in 2021/22 to date may therefore adversely impact its profitability.
Braga Finances – Profitability
Braga incurred its first loss in three years as it felt the impact of the loss of fans. The true reason for its loss however was the absence of management compensation which was significant in 2020.
Operating profit / loss before player trading
Before player trading, an operating profit of €4.7m became an operating loss of €16.1m. The loss of matchday revenue and significant reduction in other operating income the reasons. This highlights that SC Braga is still very dependent on the sale of players to make a profit.
Operating profit / loss after player trading
After player trading, an operating profit of €21.6m became an operating loss of €1.9m (109%). Despite significant player sales, Braga didn’t manage to achieve a profit due to the above operating loss. It did however have a positive effect by preventing further losses. Reduced player sales in 2021/22 may see losses rise depending on UEL performance.
Profit / loss before tax
Net finance income of €0.1m saw Braga record a loss before tax of €1.8m. This compares to a €22.8m profit in 2020 (108%).
Braga Finances – Profitability summary
The 2021 results highlighted how critical player transfers is to Braga’s business model. It is clearly attempting to diversify and improve other types of revenue streams to achieve profitability, with UEL performance key to this. With lower player sales in 2021/22 so far, UEL performance and the return of fans will be vital to any chance of returning to profitability.
Braga Finances – Assets / Liabilities
Despite a loss, the immaterial nature of it meant the club required minimal external funding.
Cash flow
Braga’s cash reserves fell from €17m to €10.1m. This was due to cash outflows across its operations (€13.8m), capital expenditure (€1.4m) and from financing activities (€0.4m). This was partly offset by cash inflows from players transfers (€7.9m) and other investing activities (€0.7m).
Debt
Braga’s Debt stands at €13.7m, 10% less than the previous fiscal year (€15.1m). This relates to the factoring of certain transfer receivables (€10.3m), bank loans (€2.4m) and finance leases (€1.0m).
Net debt
Net debt hence now stands at €1.9m, having been in a net cash position of €4m at the end of the previous fiscal year.
Braga Finances – Final Remarks
SC Braga recorded a small financial loss in 2021 despite the challenges of the pandemic. This should largely be seen as a good result and the club will be looking to return to profitability in 2022. This will likely be predicated on any sales in the 2021/22 winter transfer window and UEL performance.
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